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If an employee takes unpaid leave, you can record it in their pay by setting up a new wage category. This also lets you keep track of how much unpaid leave has been taken, and who's taken it.

Let's take you through it.

 

1. Create an unpaid leave wage category

Create an unpaid leave wage category

  1. Go to the Payroll command centre and click Payroll Categories. The Payroll Category List window appears.
  2. On the Wages tab, click New.
  3. Give the new category a name, such as Unpaid Annual Leave.
  4. Select Hourly as the Type of Wages (regardless of whether your employees are on a salary or paid hourly).
  5. Select the option Fixed hourly rate of and leave the rate as $0.0000
    Here's our example:
    Example wage category set up as hourly with fixed rate of zero
  6. Click Employee to select the employee taking the unpaid leave.
  7. Click OK then click OK again to save the new wage category.

Accruing leave during unpaid leave

Depending on your employment arrangements, you might need to prevent leave entitlements, like annual leave and personal leave, from accruing during unpaid leave. To check your leave entitlement obligations, visit the Fair Work website.

To prevent an entitlement from accruing during unpaid leave, open the entitlement category (Payroll > Payroll categories > Entitlements > open the entitlement), click Exempt and select the Unpaid Leave wage category. If the Exempt button is not active, it means the entitlement category is not set up to calculate leave based on a percentage of gross hours.

2. Record unpaid leave

Record unpaid leave

When you process the employee's pay, record the number of unpaid hours taken against the Unpaid Leave wage category you created above.

Depending on how much of the pay period is unpaid, you'll also need to modify other amounts on the employee's pay.

Like all payroll categories and amounts in the employee's pay, unpaid leave will also appear on the pay slip.

If the unpaid leave is forDo this
the entire pay period

Remove all other amounts to ensure the Net Pay is $0.00

Here's an example of 40 hours unpaid leave.

Example zero pay with 40 hours unpaid leave

a portion of the pay period
(hourly based employees)
Reduce the Base Hourly hours by the unpaid leave hours.

Here's an example of 8 hours unpaid leave with the Base Hourly hours reduced from 40 to 32.

Example pay with 32 hours paid and 8 hours unpaid leave

a portion of the pay period
(salaried employees)
Reduce the Base Salary amount to cater for the unpaid leave. You can calculate this by multiplying the unpaid leave hours by the employee's hourly rate (found on the Payroll Details of their card). 

Here's an example of 8 hours unpaid leave and a modified Base Salary amount.

Example pay with 8 hours unpaid leave and adjusted base salary value

3. Track how much unpaid leave has been taken

Track how much unpaid leave has been taken

To see how many hours of unpaid leave has been taken by an employee, run the Payroll Activity (Detail) report (Reports > Index to Reports > Payroll > Employees > Activity Detail).

You can specify a date range for the report and filter it for one or more employees.